King Street succession plans take next step: An investor has secured the five-level retail and office building at 26-32 King Street in the Melbourne CBD for $11.98 million, fending off strong competition including the Grollos, co-owners of the nearby Rialto Tower who were looking to add to their stretch of King Street real estate.
On a 1,200sqm site offering future development potential, number 26-32 is leased to 7-Eleven on the ground floor and multiple tenants in the office space above, for a combined net return of $352,000pa. The sale price reflected a 2.9% yield. It last changed hands in 2010 for $5.1 million.
The Grollos own the properties running on the eastern side of King Street from Flinders Lane up to Collins Street, having most recently picked up the Inflation nightclub site at 54-60 King Street earlier this year for $17 million. Hospitality and hotel conversions for much of its properties along the infamous precinct have been publicly floated by the Grollos, which along with the Quincy Hotel development at 33 King Street – itself recently sold off to Indian giant InterGlobe for $91.3 million – would further its evolution.
Major players favouring CBD office projects: Further up King Street, Charter Hall has acquired the corner site at 555 Collins Street for $140 million from Singapore’s Fragrance Group, via its Charter Hall Prime Office Fund.
The acquisition means the listed player now has a 4,620 sqm corner block fronting King Street, having added to an existing landholding on King Street. It will look to redevelop the site for commercial use after Fragrance Group had spent a year in the pre-sales phase for a 625-unit residential tower on the site.
Charter Hall’s move marks another office play in place of a planned CBD residential tower in short time. In September, Mirvac picked up the Australian Federal Police headquarters at 383 La Trobe Street for $122 million, with intentions to develop an A-grade commercial tower of 40,000sqm rather than take on plans for a distinctive apartment building drawn up by renowned French architect Jean Nouvel.
They add to the strong pipeline of major commercial developments throughout the CBD’s west, including the future Victoria Police Headquarters at 311 Spencer Street, Collins Arch at 447 Collins Street, and the nearby Olderfleet development.
Meanwhile, another Singaporean player, Figtree Holdings, has just offloaded 303 La Trobe Street for $35 million, despite having sold 97% of a 44-storey mixed-use apartment project on the site.
Disclosure: The weekly Fitzroys Property Wrap is for information only on transactions in the Melbourne property market. Fitzroys provides this information as a public service. We are not purporting that all sales and leases within this report were transacted by Fitzroys.